Clash of the Titans in the offing

The global auto makers of high esteem Toyota, Nissan, Ford and the Indian players Tata Motors and Maruti Suzuki are in the tough fray to play the fiddle in the mini multi-purpose vehicle. The move comes  in the wake of freshened spirit in the segment. This MPVs are akin to the small vans having large interior space. The car makers are planning to make this vehicle a 7-8 seater at a reasonable pricing which may yield more volumes. The target customers are different people belonging to different economic stature. The auto makers have the option to convert the existing platform for this MPV or to create a whole new platform. Toyota is eyeing on the platform of Etios for this MPV, below the level of Innova.
This apart from the planned focus on a new hatchback and sedan to be developed  on this platform. Maruti Suzuki will deliver a mini MPV, Concept RIII, on a new platform to be ready by the end of 2011. Tata has its sleeves on the Venture on the lines of Ace platform to be ready by the middle of 2010. Nissan’s is on Micra and Ford’s is on Fiesta platforms. The industry analysts see the move as a unique because there is no dearth in this segment without or with less competition. The maker which involves in innovation will reap the benefits in high volume, they added. The analysts feel that this segment could envisage high margins and relieve of the dependence on main product ranges. The current models in this MPV are Maruti Suzuki Omni and Eeco at Rs2-3 lakhs. The new entrants are devising their strategy to price this MPV and the industry analysts feel that the MPV could come under Rs5- 6 lakh range. There is a talk that the success run of this MPV much depends on the exact pricing.

Auto industry faces production crisis

The new financial year saw a great deal of sale for the auto industry, but the equally critical situation is the lack of production. The increase in the passenger car is 40% as the two wheeler saw the rise of 22.07% in April 2010. The hike in the sale volume of commercial vehicles was 64%. The joy could not be reminiscent for the companies which face the production crisis to meet  the demand. Given this handicap, the industry analysts see that the growth of the industry will be 10-14% during the FY 2010-11 against 26% last year.
The demand has cut short itself due to lack of production resulted out of rececssion. The companies did not expect the sudden outburst of demand making them cajole over the situation. The major car makers who face this problem in India are Maruti, Hyundai and Tata Motors. Maruti has the capacity of 1 million units, which it has already reached and has started the proposal for a new project at an investment of Rs1700 crore. Till this facility becomes able to supply  the demand there will be contented production by Maruti. For Maruti this year will not be a problem to manage since it can deliver 2 lakh units by debottling the suppliers, said its Marketing Head.
Similar condition prevails in the camp of Hyundai, which saw a sale of 5.6 lakh units in 2009 and the company’s target for 2010 is 6 lakhs. The company sees crisis in production which may hit the export market too. The company is capable of producing 6.3 lakhs a year. The situation in Tata Motors is somewhat relieved with less bottleneck crisis in non-car segments. Its truck Ace gets the face of insufficient supply because the plant shares the production of 50000 units of Nano. In the two wheeler market, Hero Honda is facing the crisis and has evolved the fourth plant for the near future.
A sigh of relief is shown in the camps of VW, GM, Ford who have come out with small cars. There will be an addition of 10000 units to the existing volume, among Polo, Beat and Figo. The annual units may come around 150000 units. The passenger car market gets the addition of 10% from this segment. The other side of the coin rests on the suppliers and vendors, who always prefer for the established makers. They don’t take into account  the new facility by the car makers. In spite of these hiccups, the auto industry has seen the highest volume, after a decade, a growth of 50.29% found in 1999.

Bajaj discovers its winning streak- Discover

The 100cc two wheeler segment has lot of wonders and funs among the makers. The segment, normally dominated by Hero Honda, is on the anvil of focusing the triumph of Bajaj. The latest entry Discover, has made the difference. Bajaj has the foray of rivals in Hero Honda and Honda Motorcycle but within the short span of nine of months, the wonder has happened. The bikes in this category from Hero Honda – 100 to 125cc- constitute 70% of the net two wheeler market. The top most selling bikes from Hero Honda are Splendor and Passion. Earlier Bajaj kept aloof from the bikes of 100cc due to the inability to penetrate the market. The company had to rely much on the popularity of its scooters. But over the years the market for Bajaj’s scooters has waned.

The revival of Bajaj with Discover was the talk of the town everywhere. With this it could wrest the market share, dominated by Hero Honda and TVS. By June, Bajaj could increase  its share to 20% from the earlier 7.5%. this made the decline in the share of Hero Honda to 68% from 80%. The sale of Discover is around 75000-80000 units per month. However, Hero Honda maintains that its sale is still on the rise that it reached the millionth unit per quarter of fiscal 2009-10. The company is designing a new strategy to introduce new models for increasing the share. Bajaj had to come out with a valid reason for the customers to look upon its Discover, pushing away Splendor. This made Bajaj to give Discover a longer wheelbase, 5-speed gearbox and an air-filled nitrox suspension.

All these are familiar in performance bikes and Discover is no exception and the customers are too ready to get this bike at the same price of Rs42000. In addition Discover got the badge, an ally of the higher end 135cc bike priced for Rs50000. Self-start is a standard fitting, which Splendor does not offer. More important, Bajaj discovered the dearth in rural pockets, a stronghold of Hero Honda, and 40% of the sale of Discover is from this pocket. Whereas Hero Honda has 42% stake in rural areas.

Bajaj introduced more service stations in the country by increasing the number to 4500 from the existing 2500. For a town of 10000 population there is a service centre of bajaj. Normally there is a company service centre where the population is 200000+. There are 465 dealers in India who will be ably assisted by command area manager, whose prime job is to promote the products through word of mouth. To wrap more volume of sale, Bajaj has brought Bajaj Auto Finance to the rescue for the customers. The financial assistance procedures have been made easy and already 23% of the net sale of Discover is on the loans. This is a great relief, as the banks do not encourage two wheeler loans on default grounds.

One

Honda has been undergoing a crucial fall down in its market and this makes way for the other car makers. Honda is crippled by long wait and insufficient brand numbers which pave opportunities to the rival car makers. The customers easily divert their attention to other companies making Honda lose its share to 50.59%- (1.46 million scooter market) from the 57% which it held in last March. Sensing these troubles, the company has made steps to double the production- from 340000 units during the fiscal of 2004 to 780000 in 2009. The company hopes that there will be change when the Rajasthan unit runs packed. Honda’s favorite brands are Aviator, Activa and Dio.

Volkswagen keeps customer waiting for Polo

On the lines of car makers facing the production crisis, Volkswagen has fallen into the trap. Its Polo hatchback compact is on high demand but the production does not match it. Hence the customers resort to cancellation of booking and turn away from VW. The cancellation rate in NCR areas is faster than booking- 4-5 per week and the reason cited is the long wait period. This petrol engine version  makes the customer wait even for 3-4 months for delivery. The wait is expected to increase in coming days, due to the backlog of bookings. The condition for the diesel version Polo is a wait period of one month.

VW started selling Polo in March and the till date sale is 1599 units. Two more launches in A2 passenger car segment– Chevrolet Beat and Ford Figo- are making good returns. Figo has reached some 10000 owners while Beat got the sale volume of 8360 units in April and March taking the toll to 15616 units in 2010 calendar year. The market is highly competitive and the customers have the better option to choose from, without worrying about the wait period. Polo is priced in the range of Rs4.3 – Rs6.7lakhs and is pitted against Maruti Swift, Maruti Ritz, Hyundai i20, Chevrolet Aveo U-VA, Fiat Punto, Skoda Fabia, Tata Indica, Ford Figo and Chevrolet Beat.

The Chakan plant has the installed capacity of 1.1 lakh units of Polo and Skoda Fabia hatchbacks. The Chakan plant has three production lines of which one only is running to full capacity. This makes the entire production volume to low level and the company foresees the increased production from July. The company is keen on maintaining the quality and standards and even if the volume gets lowered due to  delayed delivery there is no comproimise, says a dealer. Some industry analysts quote the low 50% localization as the main factor for less production. Majority of the components are imported and this makes the delay in meeting the production low. These reasons are not however responded by any official from VW.

More ironically, the Society of Indian Automobile Manufacturers quoted as receiving faster delivery of Polo. During 2009-10, 74% of the 1.52 million passenger car sales was constituted by compact car segment . to meet the ongoin demand, VW has devised a launch of Up-hatchback in India based to be low level to Polo in terms of price. The A2 segment is something unique that it could yield profit only on higher orders. And more important, word of mouth from the owners play a vital role. The maker has to survive amidst competition on price and popluarity. To gain a significant market share, the maker has to correct the flaws to run for long miles.

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Introduction | Ford Figo | Volkswagen Polo | | Chevrolet Beat | Maruti Ritz |

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Classic transition of Mercedes-Benz

The power of turbo-charged direct-injection will come off from Mercedes-Benz when the company launches its new direct-generation injection petrol motor shortly. This, in consequence, will displace 1796cc and will be the first to be used by Mercedes coming under CGI motor for Indian roads. This engine possesses a crucial value in that it is capable of running lean burn cycle. The fuel will be absed on the load on the vehicle at the time of running. The ratio between air and petrol, 1:14 on normal condition, will get reduced to a lower ratio. This endures overall efficiency of the vehicle.

Further, there will be increase in terms of power to 183bhp and this engine gets refinement while differing from the one found in Audi and Skoda. The Piezo injectors are able to come over multiple injections similar to that of a modern common-rail diesel. This C-class engine is fit to run above 120kph lean burn and increased efficiency of 10%. This C200 CGI is restricted for sale in the Avantgarde trim variant at a retail price of Rs34.57 lakhs.